Donald Watkins found guilty on all counts, son on 2, in federal fraud trial

Ivana Hrynkiw | ihrynkiw@al.com

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Donald Watkins Sr. and his son were found guilty of federal fraud charges by a jury on Friday, more than three weeks after their joint trial began – a trial that included testimony from former sports stars and political heavyweights.

Watkins Sr., 70, and his son, 46-year-old Donald Watkins Jr., were each charged with seven counts of wire fraud, two counts of bank fraud and one count of conspiracy to commit wire fraud and bank fraud relating to a conspiracy the government claims lasted for nearly a decade. They were indicted in November, and their trial began Feb. 19 in U.S. Chief District Judge Karon O. Bowdre’s courtroom.

After more than a day of deliberation, jurors found Watkins Sr. guilty on all charges. They found Watkins Jr. guilty on two of the charges and not guilty on the remaining charges.

Bowdre set sentencing in the case for July 16.

First Assistant U.S. Attorney Lloyd Peeples, who prosecuted the case, noted some the Watkinses’ victims waited more than a decade to get closure with Friday’s verdict.

“They’ve waited a long time to hear this verdict today and we hope that this brings them at least some comfort that it wasn’t their fault,” Peeples told reporters outside the courthouse. “They didn’t just invest in a bad investment, they didn’t take a chance on something. This was fraud.”

“Donald Watkins Sr. and Donald Watkins Jr. orchestrated a brazen scheme in which they scammed their victims out of more than $10 million,” said Assistant Attorney General Benczkowski of the Department of Justice’s criminal division. “These convictions demonstrate that the Department of Justice remains committed to aggressively investigating and bringing to justice individuals who exploit others for personal gain.”

Jay Town, U.S. attorney for the Northern District of Alabama, said the case was “about deception and greed at the expense of too many.”

“The findings of guilt for these two individuals should forewarn anyone who would seek to defraud investors so brazenly,” Town added. “We appreciate the labor of the jurors whose role as citizens in this process is so critical to our system of justice. We are also grateful to the Alabama Securities Commission and the Department of Justice’s Fraud Section for allowing their personnel to engage in this investigation and prosecution.”

Although Watkins Sr. and Watkins Jr. were tried at the same time, jurors were instructed to decide their cases separately. Both Watkins men represented themselves.

“We disagree with the verdict but this is the way the American jurisprudence process worked so we will continue our fight,” Watkins Sr. said, hinting that he would appeal the decision.

Peeples, Assistant U.S. Attorneys Xavier Carter and Kyle Hankey, and Alabama Securities Commission attorney Jeffery Brown prosecuted the case.

The verdict comes after 12 days of testimony, where the investors testified Watkins Sr. sold them what they believed to be shares of Watkins Sr.’s biofuels company Masada, but their funds were actually used for personal expenses. Some of the investors who put their money into Watkins Sr.’s various enterprises were former NBA star and sports television personality Charles Barkley; former NFL players Takeo Spikes, Bryan Thomas, Carlos Emmons, and Gibril Wilson; and former NBA player Damon Stoudamire’s wife, Natasha.

Barkley testified he invested or loaned Watkins Sr. or his various companies approximately $6.15 million between 2007 to 2014, and has never been repaid.

Now, Barkley said he is “disappointed and angry” at Watkins Sr. and Watkins Jr. “because not just me, you made all of us look like idiots and fools.” He said he doesn’t expect to ever recover any of the money.

The former Auburn hoops star could not immediately be reached for comment on the verdict.

Others who testified included former U.S. Secretary of State Condoleezza Rice and Martin Luther King III—who were mentioned as being affiliated with Masada in emails Watkins Sr. sent to his investors. Both during testimony they were never involved in the company.

A spokesman for Rice said she would not be commenting on the verdict.

Full coverage of the Donald Watkins trial

Former Birmingham mayor Richard Arrington Jr., who was once a client of Watkins Sr., took the stand to talk about the four loans he obtained through Alamerica Bank—which Watkins Sr. owned a portion of—and then gave to the elder Watkins. Arrington was offered immunity in the case in exchange for his truthful testimony.

Masada is a waste to ethanol company founded by two men, Daryl Harms and Terry Johnson. Harms died in 2005 and his 50 percent of the company went to his family. Watkins Sr. had arrangements with both the Harms family and with Johnson separately to purchase their halves of the company, but they testified that he never paid the agreed upon amount and they each retain their ownership of Masada.

Investors who testified each said they believed Watkins Sr. owned at least 50 percent of Masada.

Watkins did own a portion of a Masada-affiliated company.

Both Watkins men denied any wrongdoing, with the elder claiming the investors were not directly investing in Masada and the younger saying his only involvement was as an administrative assistant to his father.

Watkins Sr. took the stand in the final days of the trial, both asking himself questions and answering them.

AL.com reporter Howard Koplowitz contributed to this story